Precision targeting is the new fuel for effective customer engagement.
The Big Tech companies such as Apple and Google long ago set the standard of customer-centricity, attracting millions of customers and billions in revenue. The huge amounts of data they gather and analyse allow these companies to understand their customers better than anyone else and take their product to new levels of customer engagement. Now, with regulations such as Open Banking and advancements in technology, retailers are able to offer similar services to their own customers.
Precision targeting is a marketing tactic that helps companies increase the lifetime value of their customer as well as increase customer engagement. We’ll be covering what precision targeting involves and how retailers can best implement it.
What is precision targeting?
Precision targeting is a marketing technique to help retain and upsell existing customers. By gathering behavioural and transactional data on customers, companies can divide customers into various segments and offer a very specific product to the 18-year-old university basketball player that likes the video game Skyrim, for example.
With people exposed to over 5,000 marketing messages every day, precision targeting is a method for retailers to stand out. The general population is getting tired of mass marketing tactics and is much less perceptive to company marketing than before. Precision targeting allows companies to cut through the clutter and provide a solution that fulfils a specific need at a specific time to a specific customer. By going a step further and gathering financial data on customers, retailers can help a buyer throughout the entire payment journey. This allows them to offer unique financial products relevant to their situation: an interest-free loan at the right time can help a consumer pick one retailer rather than the other, for example.
Relevance drives revenue: as retailers offer tailored products to customers, consumers are more likely to engage with a brand, recommend the product to friends and become brand evangelists. There are three important components to doing precision targeting correctly:
The right objectives
Having the right objectives in place is key to implementing precision targeting effectively. “Gathering as much data as we can” isn’t a precise and measurable strategy; instead, retailers need to have a clear business and customer target. For example, a retailer’s business target may be to increase the lifetime value of a customer by 2%. This can be broken down into smaller targets such as increasing the number and time periods of customer interactions.
Having the right objectives also comes with targeting the right market. The right market involves mapping out the entire customer lifecycle with specific objectives for every stage. This allows segmentation of every process the customer goes through and makes measuring objectives a lot easier.
The correct data
Many companies know the importance of gathering data, but most end up collecting everything rather than the relevant material. This produces a situation of “data overload” where there’s a lot of information but no analysis or a way to gather insights. This happens either because the retailer does not know which data to gather or does not have the correct tools or expertise to gather insights.
Understanding which data to gather comes down to the objectives mentioned earlier. If a retailer wants to increase the number of customer interactions, relevant data could include consumer spending habits, location reports and favourite purchasing channel. Retailers who do not have the adequate tools to gather and measure data can partner up with third parties that offer data insights in a format that is easy to interpret.
Gathering the correct data also involves storing the data correctly. In order to gain a holistic understanding of consumer habits and opportunities to up-sell, retailers need to make sure they avoid silos. Something like a customer data platform (CDP) allows companies cross-sell to existing customers and possibly offer their own banking solutions or financial incentives.
The process of innovation
Digital marketing and data analytics allow retailers to fail cheaply and quickly.
This accelerates the entire innovation loop: companies can build new, customer-centric services or products and test them much more efficiently than if they used offline ad campaigns or physical interactions.
Products can be quickly improved once the appropriate objectives are set and the correct data is being gathered. Based on customers’ buying habits, companies can analyse what kind of reward a customer would prefer and deliver a specific product. Customers who purchase frequently and are loyal can be offered cashback programs. Customers who struggle to buy large-ticket items can be offered interest-free loans without a credit check. Customers who want a specific add-on to their product can simply ask for it.
According to an impact study by NGData, tools such as customer data platforms that hold the customer at the centre can help increase an organisation’s Net Promoter Score (NPS) by over 15 points - a large boost in customer satisfaction.
Precision targeting is the future of marketing: it allows companies to build long term relationships with customers as well as serve consumers in a more complete and holistic way. Soon, everyone will be engaged in some form of precision targeting to stand out from the crow - those who don’t will quickly lose their competitive edge.